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FTC Says Google must change search business practices

Submitted by gma on Fri, 01/04/2013 - 08:42

(Rachel King ZDNet) The FTC has issued a number of decisions in its complex investigation of Google, ranging from changes to search business practices to licensing Motorola-owned patents. The Federal Trade Commission handed down a full bag of decisions in its antitrust investigation of Google during a press conference on Thursday.

Essentially, Google is going to have to make a number of changes to its business practices -- especially regarding search.

For starters, in a 4-1 vote, the FTC ordered Google to stop using patents purchased by Motorola to exclude competitors. These patents cover "standardized technologies" across smartphones, laptops, tablets, and gaming consoles.

During the presentation from FTC headquarters in Washington D.C., FTC Chairman Jon Leibowitz described these patents as "the cornerstone of interoperability" that enable mobile phones to talk to each other.

Leibowitz said that Google's settlement with the FTC requires the company to offer a license based on fair, reasonable, and non-discriminatory (FRAND) terms to any company that wants to use these technologies.

The FTC's stance on this is that, "if left unchecked," these patents could give way to higher prices "as companies may pay higher royalties for the use of Google’s patents because of the threat of an injunction, and then pass those higher prices on to consumers."

The worst-case scenario, according to the FTC, would be for the technology industry to abandon standards, limiting innovation and investment altogether.

But again, the bigger changes focus on search. The FTC has ordered that Google stop "scraping" the content of its rivals for specialized search results. Businesses should now be able to opt out of Google products such as Shopping and Local without being penalized in how their companies pop up in search results.

Therefore, Leibowitz continued, this will create "organic search," which he asserted will make search engines more "vibrant" and "competitive."

Additionally, the FTC has stipulated that "Google has agreed to remove restrictions on the use of its online search advertising platform, AdWords, that may make it more difficult for advertisers to coordinate online advertising campaigns across multiple platforms."

Google's senior vice president and chief legal officer, David Drummond, published Google's response in a blog post on Thursday, explaining that businesses "will now be able to mix and copy ad campaign data within third-party services that use our AdWords API."

Drummond added:

In addition, we’ve agreed with the FTC (PDF) that we will seek to resolve standard-essential patent disputes through a neutral third party before seeking injunctions. This agreement establishes clear rules of the road for standards essential patents going forward.

Leibowitz asserted that these decisions follow "an exhaustive investigation into Google's business practices." Arguing that many competitors -- including those locked in legal battles with Google around the world -- likely wanted the FTC to go further, Leibowitz said it is "time to move on here" and that the investigation is officially closed.

He added that Google has agreed to comply to all of these changes to its business practices, and that the FTC will "vigorously monitor" the corporation to make sure these adjustments are made.